Examination of Witnesses (Questions 180-200)
UNIFI
10 FEBRUARY 2004
Q180 Mr Hoyle: But just on that point,
you are absolutely right that we have seen the manufacturing go,
but some may argue it took 100 years for the manufacturing jobs
to go in the north-east and shipbuilding. What we are saying here
is that these were the jobs that replaced them.
Mr Sweeney: But it is equally
important to recognise that we do have a manufacturing base, we
still have a manufacturing base, and it may be 14 or 12%, so there
are still incredibly highly skilled individuals working in the
Midlands and the north-east who are highly skilled and qualified
in R&D and we still have that. That is the situation which,
in my view, is the responsibility of the Government in setting
that arrangement.
Q181 Mr Hoyle: Obviously a lot has been
made in the press to say that really it is the difference in VAT
and we have got down to an argument of asking whether it is really
the 17½% that makes the real difference. I do not believe
that is the case and I would just be interested to hear what your
views are.
Mr Sweeney: If that was the case,
they would all go now. I just do not see that. I just do not see
that as an argument. One of the great sophistries of life is the
tax regime, that we need to alter the tax regime. You need to
incentivise employers coming along, but we have done that ourselves
in terms of attracting manufacturing plants and car plants, so
we are not lacking in those sorts of skills. If you are going
to look at the tax regime, to simply say, "Oh, it's the level
of tax we pay in this country that is pushing jobs away",
I really cannot subscribe to that because if that was true, we
would not have the sort of developments that we see currently
in our own district, and also there would be a much greater herd
instinct to rush away, but it is a much more complex issue than
that. I think to those who just simply rush to say, "Let's
alter the tax regime and it will solve everything", no. I
think there are elements that need to be looked at, possibly corporate
taxation, et cetera, et cetera, but I would be loath, certainly
in my industry with its vast wealth, to start worrying about tax
incentives for developing jobs elsewhere. We certainly made use
of tax arrangements and recent development grants to build the
call centres in certain parts of the country now. It begs the
question to me as to whether there is an element of recompense
for public money that has gone into the financial services industry,
but that is an area we have not looked at.
Q182 Mr Hoyle: I think we need to tighten
it up with legislation. If you are going to take money off the
Government to create jobs, you at least have to ensure the jobs
remain and, if not, you compensate the area.
Mr Sweeney: That is clearly what
we have said in our submission as well, but we have not enunciated
that view this morning; we think it is a different argument.
Q183 Richard Burden: I would like to
explore a bit more the question of Barclays. You have made reference
to the agreement in relation to Barclays and I just wonder if
you can go through in a bit more detail what that agreement consisted
of?
Mr Sweeney: Unfortunately I am
the General Secretary rather than the person who actually does
the work on these matters, but I can give a bare outline and I
can probably send you the results of the agreement. Clearly it
is involvement at the first point before the decision is made
which is quite crucial, and we are involved at an early stage.
There is a guaranteed amount of money, I think £2,000 gross,
for training and development for those who have not taken
the opportunity of VR. There is redeployment. There is the best
arrangement we could possibly hope for as the trade union in terms
of redeploying those people who wish to stay. Barclays have done
well to reach that agreement with us, but that is because we forced
Barclays into that agreement and we are looking to do the same
with HSBC and they are to be credited with that because they have
seen the need to do that. The unique situation with Barclays is
that they were the first and people get accolades for being the
first in this industry. We think it is a good agreement, but it
is an agreement that can always be improved upon. The proof of
the pudding in the Barclays agreement will be how it is policed
and what the impact is. We have a system within the Barclays agreement,
if I am not mistaken, whereby both sides will police it and measure
it and look at it. The test of the agreement will be when Barclays
has another project somewhere else either within the Indian Sub-Continent
or elsewhere as to how that would go. Given our relationship with
Barclays, I would expect them not to do less than allow us to
have a full and frank exchange and influence on the business decisions,
not least because we are experienced, I think, in being able to
equate a value to those business decisions and certainly in the
light of what others are doing.
Q184 Richard Burden: You said earlier
that HSBC were following a similar kind of approach.
Mr Sweeney: Again it is not the
herd instinct, but it is encouraging the others. Clearly the situation
in Barclays was the first agreement. We are some way down the
path now with HSBC in terms of an understanding and reaching an
agreement with them, but there is still work to be done on that.
We will launch that jointly with HSBC when we go through. The
underlying nature of both of those agreements is being involved
right at the start in terms of the actual decision-making. Part
of our problem certainly with Lloyds TSB, for instance, and Newcastle
was that a decision was made, it was a fait accompli. The
decision was made and the next thing you know we are on a course
for industrial action ballots to force the employer back to start
to rethink and come back that way. With the Barclays experience
we have to date, and certainly what we would hope from HSBC, we
would hope to be in with a much earlier arrangement. I think,
if I am not mistaken, Barclays, because they would love to do
this, have probably sent evidence in to yourselves about the nature
of the agreement, making quotes from myself and Patricia Hughes.
We are pleased with the Barclays agreement, and we are pleased
that we can get an agreement with HSBC, but it is everybody else
within the industry that we are looking at as well and that applies
equally to my own union as much as any other.
Q185 Richard Burden: With the rest of
the industry, do you feel that there is actually a resistance
to go down the Barclays and perhaps HSBC route or is it just that
they are being slow about it? You have put a lot of emphasis on
the need to put the spotlight on different companies.
Mr Sweeney: We have done that
very effectively.
Q186 Richard Burden: I would like you
to do a bit of spotlighting.
Mr Sweeney: Those who have held
back because they are saying, "We're not going to do it yet",
we would hope to encourage them to come forward with agreements
now before they would need to, and that would certainly be our
view of the Royal Bank of Scotland Group, even though they have
said that they are not going to do it, but where the caveat is
"yet". We use agreements, as one would expect, to negotiate,
to push the argument on to the next employer. We have used the
Barclays experience with HSBC and we have used the Lloyds TSB
experience elsewhere. In many ways that is what makes us quite
unique. They like to think they are very separate islands of financial
superiority, but we tend to treat them with the same disdain across
the industry.
Q187 Richard Burden: You are obviously
encouraging different companies to adopt the best practice as
you see it.
Mr Sweeney: Yes.
Q188 Richard Burden: What role do you
think Government has got in spreading that kind of best practice?
Mr Sweeney: I think it can highlight
that best practice. I think the Secretary of State has already
commented on the Barclays agreement, that it was welcome and it
was an agreement against which many others would be measured,
so that sort of spotlight arrangement we have been successful
with. The Government can do that, but the Government also, I think,
has to have a broader look at what the impact of particular offshoring
arrangements are, not just simply in call centres, but the whole
question of British jobs, British manufacturing, service levels,
the public sector, et cetera, et cetera, not just simply the mood
music, but also what the implications are with the RDAs, et cetera.
I detect that the DTI, given the work that they have done so far,
I think my own perception is that the DTI recognises that it has
to do something and is pushing the argument out. We certainly
very much welcomed the Round Table discussion we had on 2 February.
It was a very stimulating debate and it convinced us that some
of the things we have done are the right things and we are prepared
to learn from others in terms of that experience. I think the
Government needs to show that upfront. We will certainly give,
and have already given, evidence to the DTI work on the question
of all of this and we would be interested to see how that comes
out, and we will certainly push and lobby at the parliamentary
level to say to the Government, "This is not a question of
red tape or over-regulation, but this is a question of governance
and government policy and the question of our whole employment
and employability going forward".
Q189 Richard Burden: Could I perhaps
push you a little further on that. You have welcomed the Secretary
of State's, in a sense, promotion of the kind of—
Mr Sweeney: She can always do
more!
Q190 Richard Burden: —agreement
you have reached with Barclays. You are encouraging them to try
to take a deeper look at what is happening in the economy, not
just in relation to call centres, but more broadly and make preparations
for that, to understand that, and you have indicated that there
is a willingness to do that. You have also indicated that there
is actually a kind of role now for RDAs and others. What do you
think they actually should be doing? Is it a question of understanding,
or are there particular actions you are looking for from them?
Mr Sweeney: I detect that the
DTI are doing it. It is my detection rather than what they have
said themselves, and the Secretary of State will speak for herself,
but I do detect that they are looking in a much deeper way. RDAs
actually have a quite crucial role to play given the nature of
what they do, not simply on the skills and learning agenda, but
also on the assessment and the risk assessment for when jobs are
leaving an area. One of the things we have been keen to build
into the agreements we have reached with the major institutions
is not simply talking to ourselves, but also involving the regional
development agencies as well because they are able to make the
assessment of where jobs elsewhere are available, the impact on
the Jobseekers Allowance, and it is those sort of really crucial
areas that the RDAs, I think, are capable of actually doing, and
we would want the Government to encourage them to do it. It requires
us to deliver our employers to talk to the RDAs as well. We detected
that that might be an area of reluctance to start with. Some employers
may say, "We are talking to you. Why should we involve anywhere
outside?" but we see a very crucial role for the RDAs, not
least because they are knowledgeable about the employment market
across the whole of their own particular development region. We
will certainly know finance. If it is in South Wales then clearly
the RDAs which will cover that particular area will know in greater
depth what the impact would be. There is also the question of
the risk assessment. I am quite keen on RDAs looking at the risk
assessment of particular jobs being offshored; what the impact
is; and what is the impact on the community groups outside of
it? We are very keen to draw those in. The government can do much
(and I would not say "empower RDAs") to encourage RDAs,
and encourage employers to talk to them. My understanding is that
some employers have done that pretty well in certain parts of
industry that are not connected with finance. We want to encourage
our employers to talk at regional level. They were quite happy
to talk at regional level when they were building the call centres
so we think there is a requirement on them to do exactly the same
now when they are seeking to offshore jobs elsewhere.
Q191 Richard Burden: A final question
and it is back again to the government centrally, rather than
the RDAs. There has been a lot of discussion in recent years about
possible changes to company law. We have seen White Papers and
so on and the legislation is still awaited. How important do you
think that new legislation in company law is, and how prominent
do you think the issue of corporate and social responsibility
changes should be within any such legislation?
Mr Sweeney: If you talk to most
chief executives they say it is of paramount importance. It has
certainly become a topic of much discussion, not least because
of some of the appalling corporate arrangements we have seen with
Enron etc It is an idea whose time we think is very much to the
fore. I served on the Accounting for People Taskforce that looked
at the nature of how you equate CSR, company statements etc I
am very keen on what changes are made in company law to actually
add teeth to what are, at the moment, very bland statements about,
"We have nice pictures of people on the corporate documentation",
but actually do not say a great deal as to how they treat people.
I have a view which I expressed at that task group—and this
is not a TUC view—but there has to be some connectivity
between what the changes are in company law and requirements on
chief executives in terms of the production of the company reports,
the annual reports and the accounting for them; it cannot be left
as it currently is. I watch with interest to see whether our views
are taken up.
Q192 Linda Perham: When we are talking
about competition from other countries in retaining particular
service sector jobs in the UK, what do you think will impact most
on your members? Will it be new technologies; or will it be the
threat or competition from low cost economies?
Mr Sweeney: I think it will be
both. You have to see the technological developments in line with
the movement of jobs anyway. My industry spends a great deal of
money on quite a lot of innovation technology and developing technology
platforms. If, for instance, you look at voice recognition, that
may well be the next big area that has an impact on jobs and job
movement. You would need a call centre, for instance, with people
at the end of a phone; voice recognition arrangements and technology
would be there. Most employers that I am aware of have plans for
that sort of arrangement. You have to juxtapose that also with,
"Can I do the job somewhere cheaper?", and that is a
balance a lot of employers look at. You also, from our point of
view, have to balance those two equations with the other side
to this: about what is left; what is the service level; what is
the impact on your customer; and what is the impact on your penetration?
It would be remiss of employers, certainly in my institutions,
not to look at the impact, as my colleague Mr O'Neill has said,
on what they are doing at a national level on their own business
arrangements. We have had customers phone up and say, "I'm
going to move my account from X because they are outsourcing jobs".
We have said, "That's not the way to deal with this".
We do not want consumer boycotts; that has never been our style.
I think the elements of labour cost would still be the driver
for most employers. We were interested again at the round table
last week when we were asking what the drivers were for people
making this decision. When you boil it all down it is actually
labour cost: "I can get this job done cheaper with good quality,
skilled labour, and that's where I'm going to go". I still
have in my stomach that that is really the main driver, but technology
will be part of that equation as well. Our job will be to broaden
that equation out.
Q193 Chairman: What do you say to people
who say, "Working in a job centre is pretty crap"? It
has been likened to the dark satanic mills.
Mr Sweeney: A job centre or a
call centre?
Q194 Chairman: A call centre. A Freudian
slip!
Mr Sweeney: You need to ask PCS.
That is their problem, not mine! I am sure Marcus will deal with
that very adequately!
Q195 Chairman: I had better make sure
that is deleted from the record!
Mr Sweeney: We will make sure
it is in!
Q196 Chairman: Some of the documentation
we have had would suggest that things like call centres are not
very nice jobs. People only stay in them for a very relatively
short period of time. They are important only as pathways to employment
in areas that have had high levels of unemployment, and it maybe
is not a bad thing we are going to lose these jobs because other
things come along behind it. You are protective of your membership;
you are protective of the people in the businesses that you are
organising and that is what you are paid to do. It could be argued
there is a jobs-worth element in it for you—because if you
do not have members you do not have a union.
Mr Sweeney: That is a fair point.
Q197 Chairman: What would you say about
that? Are you satisfied that the jobs you are defending are worth
defending in terms of the quality of the conditions under which
people are employed?
Mr Sweeney: Yes. An unequivocal
yes. We spent a lot time driving up those terms and conditions.
Most of the employment we have in call centres is not white collar
factories in terms of degradation. We spent a long time pursuing
with employers and negotiating with employers the terms and conditions
that are associated with those jobs. The jobs are not pin money
jobs. There is a big gender issue in terms of the majority of
work that is occupied by women, but they are primary earners.
It is a crucial part of the economy; and it is a crucial part
of the working arrangements. They certainly are jobs to be welcomed
in areas where we have suffered de-industrialisation before. They
are jobs worth holding on to, from our point of view, if we can
question the business case for moving away.
Q198 Chairman: Is it not the case that
one of the arguments for outsourcing within the United Kingdom
was that you could get the jobs done cheaper by lower paid workers
working in these centres, and there has in fact been a reduction
in wage rates because the wages that were traditionally paid to
bank staff, let us say 20 years ago, have fallen as a consequence
of the centres?
Mr Sweeney: No, because we have
had to drive up those rates. The fact that employers have done
it in areas altogether has driven up the wage rates in terms of
the market position. We have been very keen, with great alacrity,
driving up those rates in terms of where we operate.
Ms Cairns: The actual attrition
rates in call centres is now down to 15%, compared with what is
going on in India at the moment. The indications are that it is
25-30% in India. People in the UK tend to stay, on average, three
years within the call centre sector; and in India that is looking
more like 12 months.
Q199 Chairman: It has been put to me
if you open a call centre in a particular area the chances are
if it is the first one there will be another one shortly afterwards,
maybe about nine months later, and they will cream off maybe a
half of the people who worked in the first centre so they reduce
their training costs. Could that be the reason for the higher
turnover in India at the moment; and could it be the reason for
the lower turnover in Britain because we are not opening them
up at quite the rate we once were?
Ms Cairns: The situation in India
is quite interesting at the moment because a lot of companies
are actually getting employees to sign anti-poaching agreements.
There is also a situation in some of the very tight employment
markets in parts of India where they have to sign an agreement
to say they will remain with that organisation for 12 months without
moving. They do not have the facility to up and go if another
centre does open.
Mr Sweeney: There are certainly
market pressures on wages rates within India, even with 80 rupees
to the pound. In answer to a question I was asked before, that
is an area for the Indian organisations and Indian trade unions
to seek to deal with.
Q200 Chairman: It has been suggested
that Indian wage inflation is probably higher than it is in the
UK and they are living on borrowed time?
Mr Sweeney: That is a possibility.
From an international perspective, that is why the Indian trade
unions have to get themselves ready to deal with the possible
migration of jobs to other parts. I detect the Indian government
may be a little bit more keen on holding jobs within India. I
was a member of the World Trade Organisation delegation for the
UK in both Doha and Cancun and it struck me that, while India
is certainly quite keen on jobs being arranged, there is an element
of protectionism also from certain parts of the Indian government.
It will be interesting to see what their response is to the migration
of job, if that is what happens.
Chairman: Thank you very much. That has
been very helpful.
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